Outthinker 2025 Macroeconomic Outlook

We just finished a fascinating fireside roundtable organized by Outthinker and featuring James “Jim” Bullard, former president of the Federal Reserve Bank of St. Louis and the dean of the Mitchell E. Daniels, Jr. School of Business?at Purdue University.?With shifting financial conditions, policy changes, and global uncertainties, Mr. Bullard shared his outlook on macroeconomic trends and their implications for future business strategy.

This discussion included Outthinker members and offered insights into a variety of topics and industries through an interactive Q&A. Along with moderator Eric Goldstein, Chief Strategic Growth Officer with TIAA, these innovative thought leaders explored the top three economic conditions that will shape decision-making in the coming year.

“We want to paint a picture of the current economic political moment we find ourselves in.”

- Eric Goldstein

#1 The Economy: Resilient but not without risks?

The U.S. economy is performing well, showing above-trend growth for 10 consecutive quarters while keeping unemployment near natural levels (mid-4% range). Inflation, which peaked at 9%, has significantly cooled to ~3% without triggering a recession—an outcome credited to successful monetary policy.

“Expect the dollar to be the long-run reserve currency. There have only been three in the last few centuries (Dutch guilder, British pound, and USD). Things move slowly. There aren’t any rivals. Crypto is too small to have an impact at this point.”

- Jim Bullard

Key Takeaways:?

• Sustained Growth: The U.S. economy remains a global standout, with a strong dollar and stable yield curves supporting expansion.
• Inflation Control: Policymakers have effectively reduced inflation, yet long-term stability requires ongoing vigilance.
• Global Headwinds: Despite the U.S. strength, Europe’s contraction and China’s slower growth could impact multinational corporations.

Implications:?

• Investment Confidence: The U.S. economy provides a solid foundation for strategic business investments.
• Diversification Strategy: Companies with global exposure should assess risks from weaker European and Asian markets.
• Cost and Pricing Adjustments: Monitor inflation trends to optimize pricing strategies and supply chain costs.

The U.S. economy continues to show good growth, supported by a strong dollar and stable yield curves, while policymakers have successfully reduced inflation. However, global challenges, including Europe’s economic contraction and China’s slower growth, could impact multinational corporations. Business leaders should capitalize on the stable U.S. market for strategic investments, assess risks associated with weaker international markets, and adjust pricing strategies and supply chain costs in response to inflation trends.

#2 Policy Review: Pro-growth but with trade uncertainty?

The incoming administration is expected to focus on deregulation, corporate tax stability, and tariff adjustments. “We’ve two and a half years of above-trend growth in the US, and now a new administration coming in that’s probably more business friendly,” says Bullard.

Just recently President Trump announced tariffs on all imported goods from Mexico and Canada, and an additional 10% tariff on Chinese products. While some of those announcements are currently on hold, the trajectory of this administration’s trade policies may shift to level the playing field with China, the EU, and India, potentially affecting global supply chains.

“You are going to see deglobalization and less global integration than we’ve had historically. A lot is coming from China. It’s a Cold War and both parties agree. US and Chinese economies are so intertwined that it’s not possible to unwind, but relationships are a lot more at arm’s length.”

- Jim Bullard

Key Takeaways:?

• Deregulation Trends: Business-friendly policies may ease compliance burdens, fostering a pro-growth environment.
• Tariff Revisions: Adjustments could impact import/export costs, supply chains, and pricing strategies.
• Immigration Policy: While changes are expected, the direct impact on labor markets and inflation is somewhat predictable.

Implications:?

• Trade Readiness: Stay informed on evolving tariff policies and their impact on global operations.
• Policy Engagement: Businesses should engage with policymakers to advocate for favorable tax and trade regulations.
• Strategic Positioning: Prepare for policy-driven shifts in competitive landscapes, particularly in trade-intensive sectors.

Deregulation is easing compliance burdens, creating a more business-friendly environment, while tariff revisions may impact supply chains, costs, and pricing strategies. Immigration policy changes could affect labor markets and inflation, though with some predictability. To stay competitive, business leaders should monitor trade policies, engage with policymakers to advocate for favorable regulations, and adapt to policy-driven shifts, particularly in trade-sensitive industries.

#3 Geopolitical Concerns: Caution needed?

While the U.S. economy remains robust, geopolitical tensions and economic shifts in Europe, Japan, and China introduce new challenges. China's income snags and Japan’s yen depreciation could create volatility in global markets.

“CEOs are hesitant to invest in China. China may be headed towards a middle-income trap—a common phenomenon in which countries adopt capitalist principles, see success, then slip back to old policies.”

-?Jim Bullard

Key Takeaways:?

• U.S. Borrowing Capacity: The U.S. government maintains strong fiscal standing despite long-term concerns about entitlements and defense spending.
• China’s Slowdown: Economic cooling and geopolitical tensions are leading to reduced corporate investment in China.
• De-globalization Trends: Businesses are shoring up operations and relying more on regional supply chains.

Implications:?

• Risk Mitigation: Companies with global revenue streams should hedge against currency fluctuations and geopolitical disruptions.
• Regional Strategies: Consider localizing supply chains to reduce reliance on unstable foreign markets.
• Investment Realignment: Shift focus toward U.S. and emerging markets with stronger growth potential.

In the coming months, strategy officers should closely monitor the first 100 days of the new administration, as key legislative priorities—including potential changes to tax policies, tariffs, and deregulation efforts—begin to take shape. Congressional developments will also be critical, as the balance of power in the House may determine whether bipartisan deals emerge or political gridlock stalls economic initiatives.

On the global stage, shifting economic conditions in Europe, China, and Japan will influence trade dynamics, currency movements, and overall business confidence. A tariff war with Canada and Mexico may also cause strain on supply chains. The performance of the U.S. dollar, evolving trade policies, and inflation trends will serve as key indicators for companies navigating international markets.

Prepare Your Organization Today with Strategic Action?

? Reevaluate global market strategies to align with U.S. economic strength and shifting international risks.

? Engage policymakers on tax and trade issues to secure a more favorable business climate.

? Invest in digital transformation and technology-business integration to stay ?? ?competitive.

The U.S. economy is poised for continued resilience, but policy changes, global economic headwinds, and geopolitical shifts require proactive planning. Now is the time to monitor regulatory changes, diversify risk, and engage in strategic decision-making to stay ahead of uncertainty.

For more insights and access to exclusive discussions with top economists, visit Outthinker.